Kashkari Warns of Persistent Inflation Despite Rate Hike

US Federal Reserve President Neel Kashkari emphasized that inflation remains too high in the US economy, extending beyond recent energy price surges. Despite the Fed's recent rate hike to a range of 3.75%-4.00%, Kashkari believes that monetary policy cannot directly address disruptions to oil supplies or reopen key shipping routes.

The rate increase came as policymakers grapple with persistent inflation alongside growing risks from higher energy prices. Crude oil prices have surged following the escalation of hostilities involving the United States and Iran in the Strait of Hormuz, while Saudi Arabia has closed its East-West oil pipeline after aerial attacks.

Kashkari stressed that inflationary pressures extend well beyond energy costs, particularly in services, where the Fed's interest-rate tools can influence demand and price growth. He echoed concerns raised by Fed Chair Kevin Warsh, who estimated that the inflation measure used by the Fed to guide its 2% target was running at around 3.6% in August.